Chinese e-commerce giant Alibaba has revealed that its mobile strategy and Aliyun operating system will continue unchanged despite becoming the center-piece of a dispute with Google that saw a key handset launch cancelled.

The company, which is predicted to see its gross sales overtake Amazon and eBay combined this year, was dealt a hefty blow last Thursday when Acer reneged on plans to launch the CloudPhone A800. The Taiwanese company is the most reputed Aliyun partner to date, and Alibaba claims that Acer pulled the plug after being “pressured” by Google.

The weekend saw the incident ratcheted up when Android chief Andy Rubin moved to clarify the situation by stating that Aliyun — which Alibaba claims to have spent 3 years developing — uses the Android runtime and is therefore an incomplete Android build. That definition makes it off-limit to members of the Open Handset Alliance (OHA, of Android partners) which signed an agreement forbidding them from working with ‘modified’ builds.

Alibaba has consistently argued that Aliyun is not an Android fork, saying that it uses open-sourced elements of the Google-owned platform, making it perfectly fine for OHA members. However Rubin showed no signs of backing down, and he later claimed there is “no disputing that Aliyun is based on the Android platform”, though he did admit it lives outside of its ecosystem.

Google’s position may have claimed one launch — though it has not revealed its dialogue with Acer — but it is likely to prove more significant by scaring off future handset partners. Despite that possibility, Alibaba’s mobile strategy will move forward unchanged, its VP of international corporate affairs John Spelich told TNW:

Aliyun plans to continue to grow in China and we welcome discussions with any hardware company that wants a true alternative to Android. New hardware is coming as well (details TBA). As far as the Acer phone, you’d have to ask Acer but they have expressed a willing to continue cooperation with us.

And there are no plans to modify Aliyun O-S based on anything Google has said.

Spelich believes that true openness is the major selling point of Aliyun, which targets China’s burgeoning ‘affordable’ device space, and he explained:

Aliyun is an open source based O-S that is also an open ecosystem that allows others host their mobile-enabled web sites in our cloud and we make those web sites available to users who use Aliyun O-S phones. So we are an ecosystem that includes other Internet companies, whereas Android does not because it provides apps through downloads. It’s the crux of the whole cloud vs app debate. Cloud is open, apps system is closed because it is controlled by the operator of the apps marketplace. So you see: two competing ecosystems, one that’s open through the cloud, the other is closed and restrict users to only the apps that they want you to see.

Mystery surrounds the future of the device in question. Acer has remained remarkably quiet during Alibaba and Google’s verbal sparing. Its only substantial response has been a tepid statement, provided to TNW, which makes no mention of its position on Aliyun:

Acer is committed to designing innovative products and services that enhance the user experience for our customers. This includes smartphones and cloud services, a combination of hardware and software with internet services essential to raising Acer’s product values.

Regarding the abrupt cancellation of yesterday’s press conference with Alibaba in China, Acer expresses deep regret and sincerely apologizes for the inconvenience caused to our media friends. Acer will continue working with its strategic partners in China to create improved product and service offering, and looks forward to sharing the results of our win-win developments in the near future.

Irrespective of whether Rubin or Alibaba is correct, Google has made its move in ‘outlawing’ Alibaba as an Android fork and it seems unlikely that the Chinese company can change that, short of removing its compatibility with Google Play and Android apps – which would go against its open philosophy.

That begs real questions about future devices based on the Aliyun operating system, since the list of manufacturers signed up to the OHA is a veritable who’s-who of the tech industry. According to Google, any of the following firms would lose their Android licenses if they were to release an Aliyun-powered phone: ASUS, Foxconn, HTC, Huawei, Lenovo, LG, NEC, Sharp, Toshiba, and more.

In addition, all three Chinese mobile operators are signed up and, though Google is yet to be put in a position of difficulty with an operator, that further complicates the issue.

Yet, with those names looking unlikely, Alibaba remains in real need of a big name partner. The company has a lofty ambition to challenging Android in China, but its efforts to date have been decidedly low-key, with just 1 million devices sold. The first Aliyun phone — made by Tianyu — debuted in 2011, while the latest incarnation — the Haier Zing — arrived in June.

Interestingly, Chinese manufacturer Haier is actually part of the OHA but, unlike Acer, it escaped the wrath of Google when it launched the $157 phone. Given Acer’s high profile incident, it’s unlikely any other OHA members will risk being as lucky (or insignificant) as Haier for the sake of what remains a largely unproven system.

If it is unable to change Google’s position, things are unlikely to work well for Aliyun, which seems destined for life in the small time, with a low profile and modest sales figures. For a company like Alibaba, and its iconic CEO Jack Ma, this won’t cut the mustard and — fairly or unfairly — its approach to mobile will surely have to change.